The Rochesterian in Your Inbox:

His plan would allow private start-up companies that locate at select colleges to pay no income, property or sales tax. Cuomo believes this would spur investment and create jobs.

There are several problems with this approach. First, the rest of us will be paying the taxes these companies are avoiding. Second, the plan hurts municipalities desperate to fill vacant office space and generate property tax revenue. Third, competing businesses get no such benefits, creating an unequal playing field. Fourth, the program could invite abuse.

(Tax Foundation’s Scott) Drenkard said such targeted tax breaks make the tax system unfair and ultimately hurts, not helps, businesses.

“Carving out special tax breaks for certain favored businesses is destructive to the economic playing field,” Drenkard said. “A much better option in the long run is to go with broader tax bases and as low a tax rate as you can make while still maintaining necessary government services.”

(Syracuse University Professor John) Yinger says virtually all the research he has seen, and that he and his students have conducted, on targeted tax breaks shows they simply don’t work — especially those that hope to attract businesses in from other states.

“In New York we have a dizzying array of tax breaks with no evidence they help, and now here’s a new version,” said Yinger, who teaches courses in public budgeting and researches the effect of taxes upon behavior. “I think it would be just be another source of inequity in our tax system and would do nothing to help promote economic development. You’d do much better improving our schools and infrastructure than giving tax breaks to businesses who would be in the state anyway.”

13 Responses to Nothing is Free

I have been following this economic development plan since Albany set up a test incubator at SUNY Albany. I think taking the core concepts of the test and implementing them are sound. Allowing a tech corridor with specialized skilled labor being pumped out every year is a recipe for success. I just don’t think creating what seems like a rehash of the Empire Zone idea, that was abused by local businesses like the Sutherland Group, is a recipe for NY’s economic success. Setting guidelines for tax breaks and incentives doesn’t foster economic prosperity. It creates a “burn and churn” vicious cycle of the labor pool.

Rochester and Buffalo are turning out some of the best talent this country has seen. I don’t think taking the gist of what made Albany successful and trying to reproduce it is the best solution. Taking the time to foster real prosperity means understanding the tools at our disposal. Not every city in NY is a round peg/round hole situation. I believe that in the dire need for political capital and the short-sighted debt gap crisis NY is currently in, we don’t hastily put together plans that don’t foster growth.

NY has already tried this in various ways in the last decade. If NY was creating favorable conditions in the last decade to create growth, the jobs and companies would already be here.

President Obama has said in many speeches that in areas of economic recovery, help the people retool themselves. Make deals with companies that would be a fit for the talent pool and help area schools provide the funding and education to allow a talented pool of workers that will fill those jobs. This is a New Deal idea. When leaders of all the parties represented have a say, then secondary and tertiary markets (service industry) open doors. That is the recipe of success in Albany’s tech center. Maybe a bio-med tech corridor in WNY? Only when politicians realize that there are other people that go to work besides themselves. How hard is it to make a list of these companies that are looking to expand and give them a pitch as to why they should move here?

My comment is a response to the issue of cameras in our courts. All courts are open to the public. All reporters are welcome in all courts. If anyone wants to know how the justice system works, simply go to a court and sit and watch. Trust me, you will be BORED to the extreme. It is not like TV. I object to televising trials. Defense attorneys only hope to get a guilty client off is to create a circus. The cameras will allow them to do that. If the client is truly innocent, the cameras will allow the prosecutor to showboat and create the circus. For true justice to prevail, unnecessary distractions must be minimized. Let the facts prevail. Let the justice system be the determining factor, not the media. Just my thoughts….I have observed hundreds of trials.

Giving workers an income tax break because they work for the “favored” company …is… WRONG.

Just as giving free parking in Downtown public parking garages for workers of certain favored companies is wrong and unfair.

Government luring companies to move to this area and giving them and their employees tax breaks to compete with my company or the company I work for… who’s paid NY State taxes for years … is way way wrong.

Government has to get out of the private sector and picking who wins with tax breaks and who is the loser who has to pay for the tax breaks.

Cuomo did not think this through and Duffy is fool for thinking the plan is great.

This is such a tough situation. How do you lure companies and people here without making it completely unfair to the companies and people who have been here and paying the sky high NYS taxes for years?

My big problem with this is why is it select colleges and not just anywhere in Upstate, NY? I do feel that the governement should help in any way that it can to help develop jobs but picking where they are going to be is not correct. Each region of the state should get an equal opportunity.

An easy way for government to help is to mandate that SUNY schools change their goal from pushing out graduates to getting their graduates hired. A school’s success rate should be rated on its job placement percentage and not on its graduation percentage. Extra points for finding jobs within 100 miles of their school. Colleges are booming and making money hand over fist but are not doing anything to promote job growth in the state. Cuomo’s focus is wrong here and rather then tax breaks it should be on how to keep people here by growing jobs here.

Let’s assume Newco sets up in the new FREE ZONE and they sell the ever-popular widgets. A few miles away is an established firm, Localco, that also sells widgets and has been selling them for many years.

Newco has less overhead (no property taxes, no income taxes, no sales taxes) so they can make widgets for less meaning they can sell them for less. As a result, customers of Localco start buying the widgets from Newco.

Localco has less sales and so it collects less sales tax (for NY) and it has less profit so it pays less income tax (to NY). Due to lower profits it must lay people off who used to have wages taxed (by NY) but are now going to collect unemployment (from NY) and some may go on public assistance (from NY).

While not in the State’s budget, local services such as police and fire will need to be provided for Newco (free, of course) and Newco will not pay property taxes to support the schools and teachers for it’s new employees, so the local school district must do more with less.

Somehow, I get the feeling Cuomo was drinking a 48 ounce slurpie and got a brain freeze when he was thinking this through.

“How do you lure companies and people here without making it completely unfair to the companies and people who have been here and paying the sky high NYS taxes for years?”

Pretty simple. Lower taxes FOR ALL. How do you do that? CUT SPENDING… where? Everywhere you see it. We don’t need a skate park, a City run Bar in Charlotte, a 2nd walking bridge to the UR, the UR can pay for their own expressway exit, School districts spending, etc. Plow the roads, maintain the roads and bridges… and that is about all the state needs to do.

As time passes, Cuomo is looking less and less like he has a clue. This scheme is absolutely ridiculous. And Cuomo’s fradulent “New York is open for business ads” are a crock – thinly disguised campaign ads for a guy with grand ambitions, and little substance to back those ambitions up with. I have a feeling that by the time all is said and done, the expose that will be written on this guy will be something, starting with his overly cozy relationship with casino gaming interests.

The plan is bad because besides the already stated issue of picking winners and losers and ignoring long established businesses, itll increase sprawl. There aren’t many suny schools in upstate cities. They have lots of already vacant space that should be out to reuse.

I agree the best practice would be tax cuts via spending cuts. Nys and local govt is turning into a giant nanny state full of people who could never be important in private business and now jam Albany and city hall full of bureaucracy. If its not a road in need of repair/plowing, garbage in need of collecting, a houseon fire, a person in danger, a criminal in need of arresting, or water pipes and street lights the government shouldn’t be involved. if we stuck to that we could not only have less taxes but probably more policemen, firemen, and garbage men too.

4.) Unlike Empire Zones SUNY or Private Colleges would want companies and start ups that would hire their students out of their schools to raise their rankings.

5.) Unless a dictator is going to take over New York State, it will take a long time for democrat, republicans, downstate, and upstater’s to agree upon spending cuts.

6.) Why would you want to start a company in Cold Snowy Upstate, NY when all the VC/ Angel Investment money, conferences and talent is migrating to NYC. People don’t think about Rochester when you tell them you live in NY they think of NYC. Dramatic actions like this have a better chance of at least making something happen than sitting around talking about how all the buildings are vacant.
Kodak never took a risk they were a culture of people afraid of change (https://www.youtube.com/watch?v=kZKYYz43zfM this guy hits it dead on), does the rest of the city really want to follow the kodak model of playing it safe?

What no one seem’s to try and point out is that Andrew Cuomo is strictly a political animal,trained by his father Mario and a few years in DC under Clinton.He is not anywhere
close to being qualified to manage and develop New York State for the residents and
taxpayers.Every direction,every move he makes is to his benefit and that of his party.This lastest push,for “new,tax free zones”is nothing more then a political ruse to make Andy look like he’s “doing something”
if it becomes law,and if it fails,(or does not pass)its someones elses fault!
Am I the only person getting sick of the damn commercials on TV & Radio with our seemingly narcissistic governor endlessly telling us how wonderful he is????